In year 2020, nearly every business and companies in Malaysia has been

affected by Coronavirus disease (COVID-19) outbreak and the severity of the impact
of Covid-19 outbreak on the business is unprecedented including Malaysian rubber
products industry. Therefore, Malaysian rubber products industry has been
challenging and suffering various of economics problems, such as reduced demand
and supply. Other than that, Malaysian rubber products industry is in perfect
competition because its market structure had an infinitely large number of buyers
and sellers who operate freely and they sell homogenous rubber products at a
uniform price and they not bonded with the market or other industry.

Before Covid-19 pandemic which is February 2020, the quantity demanded of

natural rubber from abroad is 135,494 tonnes, increased by 0.46%
against 134,868 tonnes in January 2020 while the quantity supplied of natural rubber
to abroad is 51,852 tonnes , increased by 13.15% against 45,827 tonnes in January
2020. It is because prior to the announcement of the Movement Control Order
(MCO) was not affected on the activities for export and import natural rubber of
international trade during that period. According law of demand, when the quantity
demanded of natural rubber from abroad increases, the price of natural rubber will
be decreases as the price of natural rubber was decreased from RM5,903.80 per
tonne in January to RM5,496.80 per tonne in February 2020 which is decreased by
6.89% or RM407 per tonne. However, by comparison with last trading week of
January which is a declined RM405 per tonne and a declined RM15 per tonne in
February 2020 respectively, it shows that the market recovered moderately after a
major fall. The rose in price was influenced by a weakening of ringgit against the U.S
dollar.

Eventhough the price of natural rubber declined from RM5496.80 per tonne
in February to RM 4701.30 per tonne in May, after the enforcement of government
policies which is the implementation of MCO extremely affects the quantity
demanded and quantity supplied of natural rubber for abroad from February to May
2020. As the quantity demanded of natural rubber from abroad in February is
135,494 tonnes was declined to 49,658 tonnes only, a sharp decreased 85,836
tonnes or -63.35% on natural rubber. Due to MCO, Malaysian rubber products
industry was not permit to employment to work and proceed to rubber processing
activities in the factories.

In June, the market of natural rubber improved slightly as countries around

the world gradually loosened their COVID-19 lockdown restrictions and it had been
raising hopes for Malaysian rubber products industry to recover their demand and
supply for abroad. Therefore, the quantity demanded of natural rubber from abroad
was going to rise rapidly from 57,598 tonnes in June to 142,441 tonnes in December,
increased 84,843 tonnes or 147.30% in natural rubber. Moreover, the quantity
supplied of natural rubber to abroad was also increased from 33,789 tonnes in May
to 61,547 tonnes in December, increased by 27,767 tonnes. According to law of
supply, when the quantity supplied of natural rubber increases, the price of natural
rubber will be increases, hence in the same time, the price of natural rubber also
increased dramatically from RM4,701.30 per tonne in May to RM6,287.40 per tonne
in December 2020. It is because world’s leading rubber comsuming countries such as
China and USA had been procced economic stimulus programs to recovery their
economic after a period of prolonged weakness because of Covid-19 pandemic. It
brought a positive impact for the Malaysian rubber products industry .

In addition, the demand curve was intersect the supply curve at 74,460
tonnes natural rubber at a price of RM5469.08 per tonnes natural rubber. The
intersection point of demand curve and supply curve is called equilibrium point while
the quantity 74,460 tonnes natural rubber is equlibrium quantity and RM5469.08 per
tonnes natural rubber is equilibrium price for natural rubber. At the price
RM5903.80 per tonnes natural rubber, the quantity supplied of natural rubber to
abroad was 119,539 tonnes natural rubber was higher than the quantity demanded
of natural rubber from abroad was 57,598 tonnes natural rubber,hence Malaysian
rubber product industry exists a surplus on natural rubber with 61,941 tonnes
natural rubber. At the price RM5386.80 per tonnes natural rubber, the quantity
demanded of natural rubber from abroad was 107,947 tonnes natural rubber higher
than the quantity supplied of natural rubber to abroad was 42,659 tonnes natural
rubber, hence Malaysian rubber product industry exists a shortage on natural rubber
with 65,288 tonnes natural rubber.